(Reuters) -Air New Zealand Ltd on Thursday flagged it was heading for the worst annual loss since 2001 due to a combination of an Auckland lockdown, expiring government relief schemes, rising fuel prices and an ongoing international border closure.
As other airlines globally recover from the worst of the pandemic, Air New Zealand forecast it would report an annual underlying loss before tax and significant items of more than NZ$800 million ($541 million) in the financial year ending June 30, around double last year's figure of NZ$440 million.
The forecast came after the airline reported its first-half statutory loss before tax more than tripled to NZ$367 million, from NZ$105 million a year earlier.
Air New Zealand Chairman Therese Walsh said its performance in the 2021 financial year had been better because the domestic network had largely kept flying and travel bubbles with Australia and the Cook Islands had boosted the second half.
"The 2022 financial year has and will continue to be much more heavily impacted, both by continued suppressed demand and rising costs," she said in a statement.
Air New Zealand also said on Thursday it plans to raise equity by the end of March or shortly thereafter to replace a NZ$2 billion liquidity package from its largest shareholder, the New Zealand government.
The airline had drawn down NZ$760 million of a government loan by Wednesday, it said.
The carrier's domestic business was hit hard in the first half by a lockdown in Auckland, the country's largest city, at a time when international borders remained closed.
The government has announced plans for a phased border opening this year, but travel bodies say rules requiring self-isolation on arrival need to be removed to revive the struggling tourism sector.
Air New Zealand added that there was still "a large degree of uncertainty" over the impact of the Omicron variant on demand for domestic travel for the rest of the financial year and self-isolation rules would have a significant impact on international demand.
($1 = 1.4775 New Zealand dollars)